tv The Willis Report FOX Business September 22, 2012 11:00pm-12:00am EDT
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gerri: hello everybody. i am gerri willis. outrage tonight over small investors being ripped off. it has been the focus of that investigation this week. a big issue being debated on capitol hill. this is something every individual investor at home should be concerned about. if you have a 401(k), and ira, a savings plan for your kids, grandkids, listen up. this involves you. warning that high frequency trading firms are putting your money and global system at risk. joining us now richard grasso. it is great to have you here. an absolute pleasure. >> gerri, it is an absolute pleasure to be here. gerri: investors are losing confidence. losing confidence that time.
some 15% of americans polled say they don't have trust in the stock markets. what is behind that? >> it is very sad. it could not come at a worse moment. if you look at what is happening since may 2010, everyone has been railing against so-called high-frequency trading, algorithmic trading. no one, i mean, no one can sit here, myself included, and give you an answer as to what is right about that and what is wrong about that trading. i think the sec has a much broader problem. the whole structure of the market in this country. we have dark pools, semi- light pools and we have stock exchanges. we have virtually 60 different places where ibm trades under all different roles. gerri: just to fill people in just a little bit. dark pools.
you do not know what is going on. like it is trading in the closet as opposed to being out on one of the big exchanges. >> that is correct. if you turn the clock back, not that we should, the date that i've left the exchange, we had an 84% market. eighty-four traded on the big work. that was the pricing for all letter for anyone else who wanted to compete. gerri: not anymore. one critic of the market right now is calling the volume, the shares that are traded on the new york stock exchange toxic trade. trade that no one else wants to handle. the ones that are legitimate are going into these dark pools. >> that reinforces what i just said. the first stop is the dark pool, the second is the semi- light pools. that is wrong.
the structure of the market in this country needs to be redefined by the sec and why it is so horrible, it scared investors out of the market at a time when they have been willing to accept. just take one year, 22 basis points return on their money. .22 at a time when the market is up 20%. that is just sad. gerri: it is sad and frustrating. may 2010 we had the flash crash. eventually it was all put right. it was a very scary plunge. knight capital loss $440 million. very quickly. we had the facebook ipo. disappointing and now we are told that many flash crashes happen every single day. on a daily basis. >> let's start with may 10. how does a very global business
go from $42 a share to one fraction of a penny back to $42 less than an hour. the answer is because the machines have gone wild and no one is in control. the answer is not to rule out categories of trading, it is to regulate them. many of the firms are nothing more than a re- creation of the old specialist system. they are electronic makers. they are conducive to the market functioning smoothly. they should be regulated. they should be cordoned off from everything else. gerri: you know how this works. the issue hundreds of buy and sell orders at the same time. it has nothing to do with the underlying stock. what competitors might be doing. >> why aren't there hundreds of different types of orders,
gerri, when you want to buy, when you want to sell, when you want to buy or sell at a specific rice, a couple different variations of that. they have a responsibility to the investing public to hold up the stop sign and say wait a minute, we made a mistake, but the commission seven years ago when they formulated regulation nms. we made a mistake. let's fix it. let's fix it. you have to let markets function. the structure of the market and the definition of the difference between electronic market makers, high-frequency traders, that has to be the sec's responsibility. they are not getting to it. they are not being funded. the congress is not giving them adequate money to go in there and reregulate the market. gerri: let me ask you about this. i think these two things are
connected. the new york stock exchange is being fined for giving some of these traders more information ahead of other investors. it raises the question, do that exchanges, the old-fashioned exchanges, don't they -- they are paying for volume. they are desperate for volume. they are losing volume. you said yourself you had 84% of the market. not anymore, my friend. isn't that the problem in a nutshell. >> the ceo of new york said that. he felt that it was an oversight technologically. notice at the very end it said, without admitting nor denying, but they took a $5 million penalty. the reality is, we have to step back, the same way you regulate markets for the benefit of
public users and look at, for instance, how you segregate customer funds. another reason that investor is running out of the market today. look at mf global. the cardinal rule of wall street. customer funds are never to be touched. unforgivable. the sec, i think with the right funding, okay, i know mary shapiro, i have known her a long time, a terrific regulator, a smart woman imus if she the right funding, these markets would invite the public back in and, you know what, the public would benefit because of those rates of return. gerri: people have said this forever. that they are underfunded. undermanned. people do not have the experience they need. this was said, not by me, but by a senator. the capital markets are a public good. much like a highway.
we need to have clear rules about the speed limits and who can use the hov lanes. we need to make it clear what the rules of the road are. do you agree with that? >> i agree with that. i have a couple of caveats to it. when you are on the highway and doing 200 miles per hour in your ferrari and you hit a hospital zone, you have to slow down even though that ferrari can do 200 miles an hour. it is about rules. it is about common sense. it is about a very simple test, gerri. what we are about to do with a rule, a piece of technology, is it right for the most sophisticated ruler. take care of that person. they will be back in the market. everyone will benefit. connell: i had a traitor tell me this week speed kills. >> a fast price is not the best price. a fair price is what everyone
seeks. you can go 200 that ferrari, you do not do it on a public street in manhattan. that is the answer. basically, you do not want the free market to become a free for all market. at times, that is what it has become. gerri: great stuff. i have to ask you another question. paxman didn't coming up. what is the impact on the market? >> i think it will be huge. if all the sudden your tax goes from 15% to 39%, what do you think will happen? gerri: a lot of selling. >> one of the great tragedies is where did the money go? it went into fixed income. if your investors are in long bonds when rates return to their norm, they will lose more money
and bonds than ever lost in the equity market. gerri: we have great conversation, great advice. richard grasso, thank you so much for coming on tonight. >> thank you. my pleasure. gerri: such a pleasure. >> apple fans cannot wait to get their hands on the new iphone. and idle fans singing about it. is it all worth it? >> you cannot change washington just from inside. you change it from outside. >> to the president so in the flag of surrender with this. ed rollins gives his take. and a warning for all of you popcorn lovers. eating too much of it is not just bad for your heart.
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♪ gerri: shares of apple hitting a fresh all-time intraday high today. above $704 a share. take a look at this. shares are up within 72% since january. the iphone5 launched early friday morning. people lined up for days to be the first to get their hands on the device. including these two guys in new york city who were on the show earlier. >> take that old iphone off-the-shelf. it stands by itself. the other phones ain't got the new hst. not everybody, sing with me. i want that iphone5 today.
gerri: people have lost their minds. making it a record debut. will it live up to expectations? i have to tell you, i have one here also. however, it is not mine. i stole it. hold it up. are you happy? is that everything you wanted them mike well, you know, i don't know what i wanted until apple gives it to me. [laughter] it is faster. that is the major thing for me. it feels nice in your hand. it is the speed that is really impressing. gerri: you love it. everyone i talk to love it. there are some downsides. i have to be realistic. it said that this will devour it
of plans. let's say you want to watch a movie. your entire month is gone. let's talk realistically. >> the same thing happened on my ipad. i did one skype call and it used three gigs of bandwidth. that is a cautionary tale. if you do not have an unlimited plan, you have to be very careful. this screen and the speed of it has -- it is faster than a lot of people's wi-fi connections at home. you are less likely to switch back over to the wi-fi amply on the lte. gerri: big mistake. we were saying a single two hour movie could max out a five gigabyte monthly plan. that is a problem. we also have the map issue. this will get stolen.
they are out there because you can sell this thing for more than you paid for it to foreigners who want to get a hold of it. all you are doing is staring at you or apple iphone. >> i pulled up the map to where we are in the studio. you know, this is a strategic move for apple to get rid of google off the phone and have control of its own destiny. it will be painful for a little while as they bootstrap of these maps. google has been doing mapping for like seven years. gerri: they can do a better job than that. [ talking over each other ] have you been up all night with this phone? >> i took a little nap before the show. i am cool. gerri: you look so happy.
it is hysterical. robert, thank you for coming on tonight. [laughter] new information starting to trickle out. more of romney's tax returns are being released. plus, paul bryan really think his frustrations to obamacare. he gets booed. he gets booed. my takes coming up want to try to crack it? yeah, that's the way to do it!
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medicare is to repeal obamacare. the weekend medicare for today's seniors and put it at risk for the next generation. first, it funnels 716 duggan dollars out of medicare to pay for a new entitlement we did not even ask for. second, it puts 15 unelected bureaucrats in charge of medicare's future. gerri: well, in case you missed that, that was paul ryan getting booed. he is a little like daniel in the lions den. you have to give him credit for facing down one of the countries most powerful lobbyists for obamacare. you are used to seeing lobbyists behind big thanks. aarp is no different. the nonprofit is a powerful organization that can make
politicians wake in their boots. the nonprofit representing americans 50 and older was a critical ally in the president's campaign to get obamacare past. she cites 71 pages of e-mail between the white house and aarp staff which the top leaders were on board. even those pertinent to seniors were crafted. problem is the final bill is not the greatest for seniors. a down size and medicare advantages. it may well lead to rationing. that is a topic for another day. seniors are getting the short end of the stick and not today dollars and cents may be behind
aarp's move. first, while aarp poses a disinterested advocate, it has a liberal lobbying arm on the site. they depend on profits, royalties and commissions to make up more than 50% of its annual revenues. membership dues from seniors account for only 20%. the sums involved are not chump change. it would rank it as the nations six most profitable health insurer. >> aarp provided through secure horizons is a simple plan with predictable low out of pocket costs. gerri: do not be fooled. when we come back, harry reid said it would not happen, romney has released his tax returns. our economy headed straight over
the fiscal cliff. congress, guess what, they are on vacation again. a chief economist joins me next. ♪ copd makes it hard to breathe, but with advair, i'm breathing better. so now i can be in the scene. advair is clinically proven to help significantly improve lung function. unlike most copd medications, advair contains both an anti-inflammatory and a long-acting bronchodilator working together to help improve your lung function all day. advair won't replace fast-acting inhalers for sudden symptoms and should not be used more than twice a day. people with copd taking advair may have a higher chance of pneumonia. advair may increase your risk of osteoporosis and some eye problems. tell your doctor if you have a heart condition or high blood pressure before taking advair.
♪ gerri: romney tonight releasing his 2011 tax return and a 20 year snapshot of his taxes. here to break it down for us peter barnes. were there any surprises? >> no. this looked a lot like what the governor released back in the spring when he filed for an extension. 379 pages. here is what we have today for the final returns filed and released today. $13.7 million in income for
2011. taxes 9.1 million. they donated some of their income to charity. for this 20 year snapshot for the rate they paid, what the governor paid in taxes and the tax rates, the hope of it rule, a big controversy. they paid an average rate of just over 20%. the lowest effective rate for, not sure what year, 13.6. charitable donations for the entire. just over 13%. the campaign is saying that taxes, plus donations, equal about 39% for the romney's.
gerri: that is an interesting way to put it. romney had not paid taxes in ten years. does the senator have to take it all back now? >> he did. he did say at some point with knowledge of the matter told him romney had paid zero taxes. that is obviously not the case based on the documents released today. now he has shifted over to saying romney manipulated his taxes. "romney manipulated two years he has seen of the tax returns. "he said that over the last ten years he thought he paid about 13% on average. to this point, they did not take all the charitable deductions. it would lower their taxes and their tax rates.
gerri: that is fascinating. harry reid is never satisfied. thank you for that, peter. he still is not happy as peter was just saying. ed rollins has more on this. i just have to play that sound from harry reid. here is what he said. >> the words are out that he has not paid any taxes for ten years. let him prove that he has to pay taxes because he has not. gerri: and now what do you say? >> he ought to make sure his facts are right before he makes a charge like that. he is a leader of the congress and senate. not only did he paid more than his fair share of taxes, the $4 million contribution is extraordinary. if you go back over the last 20 years, he gave away a great deal of money away.
he is not a guy patting himself on the back, putting his name on buildings, he is basically living his mormon life. the law allows you, if you are generous, you can take a tax deduction. gerri: he has done it legally. obama had interesting comments last night on a televised interview in which he talked about we did not get anything done if you are inside washington. >> i have learned some lessons over the last four years. the most important lesson i have learned is you cannot change washington from the inside. you can only change it from the outside. gerri: he is backpedaling on that today. how do you think people will react to that comment? >> he is the leader of the country and if the leader of the country cannot get things done, and i agree with him, he could not get the congress to cooperate with them. he got a healthcare bill
through. it is a nice pattern, what do want to do go home to illinois and govern from their orders he want the white house? gerri: romney came back hard. in november he is going outside. people have been calling on romney to have a stronger response, to really come out. >> i think that was fine. what romney has to do is if you elect me this is what this country will look like four years from now. we have seen the last four years in the same policy people and policies. there is no guarantee he will be any better. gerri: we talked a lot this week about the 47% comments. obama has been criticizing romney over the comments about this. >> when you express an attitude that half the country considers
itself victims, that somehow they want to be dependent on government. i thinking is maybe you have not gotten a round a lot. gerri: you haven't gotten a round a lot. this is in response to romney. highly controversial. every republican in the world has jumped all over him. where is the republican support for mitt romney? >> first of all, it was probably not an accurate statement. a lot of people who get benefits, social security, medicare, it was a misstatement. i think mr. romney would be the first to say that. does he understand the country, what is going on, i would say absolutely. he has been out in the job market for a long time. he was a community organizer before he became president. working with people day in and day out, you have a better understanding on how to create
those jobs. gerri: mrs. romney was on a plane that filled up with smoke and had to make an emergency landing. when something like that, you sit back and say to yourself, is the tone right? there are more important things in the world. >> certainly, there are more important things in life. obviously, the romney's have spent six years running for this office. they will have another life if they do not win this thing. i have watched over the years, i have been in the business for years. i have watched people who have been killed in plane crashes in the course of campaign. who had died of heart attacks. i am sure she was tired and very frightened, as i would be. to a certain extent, you have to understand human beings work very hard to get the country choices. gerri: ed, thank you for coming on. thank you so much.
the clock is ticking on lawmakers to find a solution to the looming fiscal cliff. what are they doing now? one would think they would be in d.c. summer radically crunching numbers. no. the reality is this. house members taking off until after the election. the earliest recess since 1960. here with more john on -- john lonski. what is the threat to the economy? >> for the time being, the markets are doing quite well. the financial markets are waiting for the results of the november election to get a better handle as to how the this go cliff will be resolved. will it be skewed towards
reductions and government spending over time. gerri: there was a report out today by citigroup that the stocks could go down 20% if there is not some kind of change out there. do you believe that is right? >> i think that could very much be the case. especially if we fall off of the fiscal cliff. if we had the deep spending cuts and increases in taxes that are part of the worst-case scenario. in that case we will probably get a contraction by gdp. that will definitely put us in a painful recession, unemployment will soar well above 10%. gerri: you look at what happened as we approach this fiscal cliff. the one, two, three punch, if you will. the bush tax cuts go away. that hurts.
then we have obamacare taxes that come into play. finally, the alternative minimum tax. that starts to hurt millions of americans. there are all kind of additional taxes that come into play also. it is my feeling that americans really do not know the breath of changes that they will be facing coming next year. >> the average tax increase will be close to $4000 for each and every american. that will prove costly. one thing we want to remember is that the united states went through a period where there was a sharp contraction through government. i am talking about the end of world war ii. since we have this. brief and cutbacks in government spending, the recession was painful but very brief and then we entered into a period of prolonged prosperity. we can't afford deep cutbacks
and spending. we cannot afford very big increases by taxation. gerri: big increases by taxation. will that create another recession? there are lots of signs that we are going there already. >> that is true. we had indications of a worsening of business activity in europe and china. this is beginning to hurt u.s. exports. u.s. consumers and businesses, themselves, are shying away from major expenditures, especially business in terms of capital spending until fiscal cliff uncertainties are resolved. we are not going to resolve those uncertainties until we get the election out of the way. that is why these upcoming presidential debates and october will be of the utmost importance and they very much they have the power to move financial markets considerably. gerri: wow.
okay. i will be watching them. you will be watching them. maybe a little popcorn while we watch the presidential debates. mr. lonski, thank you for coming on tonight. >> my pleasure. thank you. gerri: the dow past 14,000. next. it is buttery. it is salty. one millions for popcorn. our legal expert lis wiehl has the answer up next. the answer up next. ♪ [ male announcer ] you are a business pro.
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gerri: forget making you fat, can microwave popcorn make you sick? that is what one colorado man is claiming. he says it caused lung problems. a jury awarded him more than $7 million. lis wiehl is here. it is your job to convince me. >> full disclosure, i do love my popcorn. i do it the old-fashioned way. i have an air popper or i do it over the stove. [ talking over each other ] this guy was using the microwave popcorn for over ten years, two
times a day. first of all, when you are looking at the popcorn and you know you are putting it in the microwave, you put it in there twice a day and you are using that chemical. there should be, this is not the best thing for me. the reason, you know, it is crazy. [ talking over each other ] gerri: he did not get some money, he got $7 million. he had a popcorn habit and now he is angry. >> legally the claim is there was no warning. openness, consume this, eat all of this. [ talking over each other ] gerri: they cannot warn about
everything. >> a lot of the products we eat and put in the microwave, there are warnings. the other thing is the company has taken this out of the popcorn. have they -- this guy worked for a carpet cleaner. he was exposed to chemicals all the time. his lawyers likened the carpet cleaner to the popcorn. he was getting double whammy. gerri: what happened to common sense? you do not eat popcorn twice a day. you do not yank it out at the microwave and start eating it immediately. to me, there is a responsibility issue here. >> the man will not get 7 million for this. the judge will come back and say that is unreasonable.
he should be awarded something, they beat the price of all the popcorn he bought over ten years. it is not cheap. buy it. buy it organic. by it in the big bulk. gerri: you did not convince me on this one, but you did a good job. have a great weekend. from popcorn to peanut butter and jelly. some schools are banning, you will not believe this, peanut butter and jelly sandwiches. not because of the rise and peanut allergies, but because of new guidelines thanks to michelle obama, the first lady, these lunches are not healthy enough. the food police strike again. what do you think about this? that is our question tonight. should kids be able to buy peanut butter and jelly in
schools. >> my daughter eats it all the time. gerri: the markets, for the most part, have been on a big tear since the fed announcement. that is coming up next. ♪ americans are always ready to work hard for a better future. since ameriprise financial was founded back in 1894, they've been committed to putting clients first.
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it is always great to see you. we had a pretty good market here for three months. can it continue? >> it is simple at this point in time. the market had a great breakout. i think it was september 6. i think we are in good stead. just keep in mind, though, this has everything to do with not just our fed, the european central bank, japan is now printing, china, india, all using. gerri: i do understand every bank on the planet using right now. that puts a lot of liquidity into all of these economies. they will go like gangbusters. what happens when we fall off this fiscal cliff in january? >> potentially. you have to remember something,
though, they have time want to go into that new here as far as the tax part. no doubt, on the spending front that could affect things. right now the market is on the fed. nothing on the fed. when we get into earnings season, that is the only thing that could affect it. sales numbers are not very good at this point in time. again, not only -- this is a fed on hyperdrive. we have not seen this money printing and i think it continues. gerri: pretty punk in the next quarter. how do you play that? what do you do as an individual investor to capitalize on what the fed is doing? >> for me, very simple. i own gold and silver. the assets will go up in price in the market in gold and silver
is part of that, also commodities. i also own housing. they are probably the strongest stocks in the market right now. gerri: what about the under lying here? how about actually buying another house? how about upgrading to a bigger house? this is an opportunity. >> i think it is a real good opportunity. i think we will bump along the bottom for a wild. i think a lot of the worst is over. you can also get pretty good deals. there is something wrong with it. just make sure it is good for you and you can afford it. gerri: thank you, gary. it is always a pleasure to have you on the show. >> sorry about that peanut butter and jelly. gerri: [laughter] >> have a good weekend. gerri: you as well.
gerri: should kids be able to allowed peanut butter and jelly at schools? finally tonight we know the post office is in serious need of help. turns out it is not just financial problems. apparently, some post offices in florida are in physical danger. i am not just talking about one or two. eight drivers, eight have crashed into post offices. they say the most common reasons drivers hitting the s